Ch. 18ADVANCED ~25 mins

NAV Errors, Corrections & Swing Pricing

Materiality, correction governance, dilution control & investor compensation

NAV error

A mistake in the calculation, pricing, accrual, share count, or other component that causes the published NAV to be wrong.

Materiality threshold

The documented level at which a NAV error becomes reportable, compensable, or board-escalation relevant under the fund policy.

Correction date

The first NAV point on which the identified error is no longer embedded after the underlying issue is fixed.

Investor compensation

The process of restoring investors or the fund when they transacted or remained invested at a wrong NAV and suffered measurable detriment.

Restatement

A formal replacement of an incorrect NAV, record, report, or investor output with corrected information.

Swing pricing

A dilution-control mechanism that adjusts the dealing NAV when net subscriptions or redemptions exceed a trigger, so transaction costs are allocated more fairly.

Anti-dilution mechanism

Any structure designed to protect existing investors from the costs created by other investors entering or exiting the fund.

Stale price

A security price that no longer reflects current value appropriately because the market moved, the source failed, or the valuation point became outdated.

Error window

The period during which the wrong NAV affected dealing, reporting, fees, or investor communications before detection and correction.

Root cause analysis

A structured review identifying why the error happened, why it was not prevented earlier, and what control changes are required.

Ready to practice?

You are: NAV Oversight Lead

A pricing error is found after dealing, the board wants a same-day correction, and investors may need compensation while swing pricing is already active · 10+ decision points

Start Scenario

Interactive · ~25 minutes · NAV governance playbook · error and dilution deep dive

Ask about Chapter 18

Ask anything about NAV Errors, Corrections & Swing Pricing.
Powered by AI with deep chapter context.

Enter to send · Shift+Enter for new line

Related Chapters

Ch. 7Risk Management & Valuation

Chapter 7 explains how NAV is built; this chapter covers what happens when that calculation, price sourcing, or governance fails.

Ch. 8Fund Administration

Fund accounting, reconciliations, and administrator control points are the operational backbone of NAV correction work.

Ch. 16Transfer Agency & Investor Lifecycle

Once a NAV error affects subscriptions or redemptions, TA, register, and investor servicing controls determine how trades are corrected.

Ch. 17Corporate Actions, Distributions & Equalisation

Distribution events and class actions can compound NAV incidents when entitlement or investor economics have already moved.

Key Legislation

§Law of 17 December 2010 and fund constitutional documents governing valuation, dealing, and investor equal-treatment principles

§Prospectus, NAV policy, error-correction procedure, and swing-pricing methodology approved for the fund or class

§UCITS / AIFMD governance expectations on NAV accuracy, valuation oversight, and fair treatment of investors

§Depositary and administrator oversight expectations for cash, dealing, reconciliation, and correction governance after valuation incidents